AI Experts Urge Regulators to Block OpenAI’s Profit Pivot

A coalition of artificial intelligence experts and former OpenAI staffers urged regulators in California and Delaware to halt the technology giant’s plan to convert into a for-profit corporation. p>

They contended that doing so would dismantle safeguards designed to ensure artificial intelligence serves humanity, not just the small subset that are shareholders.

See Also: Securing Data in the AI Era

OpenAI’s plan to convert its for-profit subsidiary OpenAI LP into a Delaware public benefit corporation has generated friction at the firm (see: OpenAI Exits, Appointments and New Corporate Model).

Under this restructuring, a for-profit company would assume full control over business and governance, while the original nonprofit would be relegated to charitable endeavors in sectors such as healthcare, education and scientific research. The signatories said that this change threatens the capped-return and public-interest mandates that once distinguished OpenAI from its Silicon Valley peers (see: Safety Concerns, Pushback Against OpenAI’s For-Profit Plan).

Nobel laureate Geoffrey Hinton, University of California-Berkeley professor Stuart Russell, Hugging Face co-founder Margaret Mitchell and 10 former OpenAI employees signed the letter, which asks California Attorney General Rob Bonta and Delaware Attorney General Kathleen Jennings to intervene. They argued that artificial intelligence’s potential impact ranks among society’s most consequential questions, and that leaving its development in the hands of a profit-driven entity risks skewing decisions toward revenue rather than the public good.

“OpenAI has a bespoke legal structure based on nonprofit control,” the letter states. “This structure is designed to harness market forces without allowing those forces to overwhelm its charitable purpose.”

In the group’s view, dismantling that structure removes crucial governance checks including an independent board majority and investor return caps, which were meant to safeguard AGI research from purely commercial pressures.

Elon Musk, one of OpenAI’s departed co-founders, is already suing to block the restructuring on corporate-law grounds. This coalition appeals to regulators’ responsibility to protect charitable missions. “As the primary regulators of OpenAI, you currently have the power to protect OpenAI’s charitable purpose on behalf of its beneficiaries, safeguarding the public interest at a potentially pivotal moment in the development of this technology,” the letter states.

The signatories want disclosure on whether alternative governance models were considered, how investor demands influenced the process and whether board members stand to gain personally from the conversion. They also call for the removal of any directors whose actions compromised the nonprofit’s integrity, along with new oversight mechanisms to ensure the independent board remains focused on OpenAI’s founding mission rather than profit maximization.

Converting OpenAI LP into a public benefit corporation would require OpenAI to pursue a public benefit alongside financial returns. But under Delaware law, that commitment carries no public-reporting requirement. Critics fear this loophole would give the restructured OpenAI latitude to chase lucrative ventures regardless of their alignment with declared social goals. With SoftBank eyeing an additional $30 billion investment conditional on conversion to for-profit status, signatories see a strong incentive for management to exploit those freedoms (see: OpenAI Raises $40B in Record Private Funding Round).

OpenAI’s journey from nonprofit to “capped-profit” hybrid began in 2019, when it spun out OpenAI LP under the control of its nonprofit parent. That model allowed investors to earn up to 100 times their investment, with excess returns reverting to the nonprofit. An independent board was supposed to guard against mission drift, and any AGI developments would remain under nonprofit stewardship.